But if we could just stop playing gotcha for a second, we might realize that federal loan programs — especially loans for innovative energy technologies — virtually require the government to take risks the private sector won’t take. Indeed, risk-taking is what these programs are all about. Sometimes, the risks pay off. Other times, they don’t. It’s not a taxpayer ripoff if you don’t bat 1.000; on the contrary, a zero failure rate likely means that the program is too risk-averse. Thus, the real question the Solyndra case poses is this: Are the potential successes significant enough to negate the inevitable failures?
I have a hard time answering “no.” Most electricity today is generated by coal-fired power plants, operated by monopoly, state-regulated utilities. Because they’ve been around so long, and because coal is cheap, these plants have built-in cost advantages that no new technology can overcome without help. The federal guarantees help lower the cost of capital for technologies like solar; they help spur innovation; and they help encourage private investment. These are all worthy goals.
To say “no” is also to cede the solar panel industry to China, which last year alone provided some $30 billon in subsidies for its solar industry. Over all, the American solar industry is a big success story; it now employs more people than either steel or coal, and it’s a net exporter.
But solar panel manufacturing — a potential source of middle-class jobs, and an important reason the White House was so high on Solyndra, which made its panels in Fremont, Calif. — is another story. Not so long ago, China made 6 percent of the world’s solar panels. Now it makes 54 percent, and leads the world in solar panel manufacturing. Needless to say, the U.S. share of the market has shrunk. The only way America can manufacture competitive solar panels is to come up with innovative technologies that the Chinese can’t replicate. Like, for instance, Solyndra’s.
Let’s assume for the sake of argument that Nocera is correct and the government should be investing in “innovative technologies.” Is the best way to do that giving out loans at rock-bottom interest rates? Even if everything goes right all we get is our money back.
What if we did it the way most investors do and bought stock in the companies? Then if the company flops we would lose money (which we would anyway) but if it succeeds we could realize a profit. The profits from the investments that succeed would offset the losses on the ones that fail.
As stockholders we would not only have rights we would also have a say in management decisions. We could appoint a trustee with expertise in that field and no personal financial interest to act as our representative. This person would have to report to both the White House and Congress.
What do you think?